Strategic Audit of a Corporation - the US IT Industry - Case Study Example

Strategic Audit of a Corporation Introduction The strategic audit of a company is the review of the company’s business plan to identify the major weaknesses and shortcomings and enable a successful development of the company. The information technology (IT) business has majorly been identified to be one of the most dynamic filed of business. IT firms need continuous monitoring if their weaknesses along with competencies to attain competitive advantage, as a minute weakness can affect the company hugely. In this regard, continuous innovation and technical soundness is of huge significance for the success of the company. Contextually, effective strategic audit is beneficial for the business operation as it helps to identify the weaknesses at an earlier stage (Bloomsbury Information Ltd., 2013; SMI, n.d.). Considering the above the essay elaborates on the eight sections of the strategic audit. Demonstrating the importance of each section of the strategic audit to develop a good made up business. Discussion I. Current Situation A. Current Performance The made up business in the US IT industry had started its operation recently. Hence, the lack of availability of adequate past data limits the computation of the return on investment, market share and profitability B. Strategic Posture The mission, vision and the objectives of the company are clearly stated along with the set norms. Mission: The mission of the company is to achieve profitability by implementing the organizational strength and encouraging unconventional ideas along with services. Objectives: The major objective of the business is to develop ethical standards and to maintain a corporate citizenship in order to safeguard the interest of the stakeholders. With continuous development of knowledge and technology the company plans to nurture its present business domain and gain competitive advantage. Strategies: The made up business follows a mix of strategies, which helps in continuous development through planning along with the technical knowhow. The set strategies are effective in order to comprehend with the mission and objectives of the company by nurturing the knowledge base and identifying new trends to maintain constant growth. Policies: Corporation’s policies are to maintain a balance between the Corporate Economic Responsibility (CER) and the Corporate Social Responsibility (CSR).This balance would help the company to monitor internal as along with external environment to attain its mission and objectives. Presently, the made up business has just started operating in the national domain without catering business to the international level. However, by maintaining the mission and objective, the business will be successfully catering its services globally. II. Corporate Governance A. Board of Directors The Board Members comprises of a certain percentage of external stakeholders along with internal stakeholders i.e. employees of the organization. The internal shareholders holds majority of shares than the external. The shares are privately traded and held by the private stakeholders. However, in the course of time the company plans to trade in the public index also. Since, the company is in its startup phase, the business requires massive support from the board of directors. The directors have strong IT background with major knowledge contributing to the business operations. The company is focusing on developing its national business rather than international business by considering the experiences of the directors. The board of directors has been serving the board since the commencement of the corporation. The board of directors are skilled people having domain knowledge, have an idea about what the top management is planning and taking active participation to maintain environmental sustainability. (Davis & Useem, 2001) B. Top Management The top management constitute of eminent personalities having domain knowledge and corporate excellence. The chief characteristics of the top management have been their domain knowledge and their corporate experience in the IT industry. The company started its operation recently and the mangers appointed are responsible for has the operation. The managers are hired externally based on their experiences in the relevant field. Even though they have a short tenure of corporate exposure, the top managers have been implementing strategic management and huge level of involvement. A proper top-down communication style is being is followed in the business. This helps in maintaining ethical - social standards and environmental sustainability in the strategic decision making process. The top executives own significant amount of shares, which enhances their level of involvement with the business Moreover, the top management is sufficiently skilled to cope with future challenges. (Davis & Useem, 2001) III. External Environment: Opportunities and Threats (SWOT) A. Natural Physical Environment: Sustainable Issues The environmental factors that have been causing major damage to the business are the solar phenomenon. . Complete system depends on the transmission of the signals to and fro the satellites, a minute change in the solar phenomenon like sun spots and solar winds can cause major damage to the IT transmissions. Additionally, severe storms or any atmospheric changes can possibly lead to signal jamming and major downfall in the operation, causing huge damage to the business. These factors are diverse in nature and depend on the geographic locations of the world. B. Societal Environment Economic development of the US and their increasing share in the global market acts as an added advantage for the company catering services in market. Demand exceeding the supply in the fields of IT, provides great economic opportunity. The stable political-legal situation backed by socio cultural development, has been acting as huge opportunity. However, the ever changing technical knowhow and dynamic technological development has been a threat for the IT companies. These macro environmental forces vary in different sectors of the globe. C. Task Environment The forces that drive the industry are its close substitutes and the threat of new entrants. These forces changes from one part of the globe to another depending on the demand and supply of the product and services. The corporation is currently affected by the consumers and huge demand of the IT products and services. The current or future threat can be identified as is dynamic technological field. Continuous development and knowledge in the relevant field would help to maintain sustainable development as per the changing requirements of market. D. Summary of External Factors The factors that are most important for the company are threats from new entrants and availability of substitutes. Moreover, the company should focus on developing their competitive advantage in the future depending on their technical development and innovative skills to identify the new trends of the market. (Dobbins, n.d.) IV. Internal Environment: Strength and Weaknesses (SWOT) A. Corporate Structure The corporation follows the decentralized structures. Decentralized structure and the hierarchy followed in the corporation is clearly understood by everyone meeting the strategies, policies and programs The corporate follows generic structure and hierarchical need that is prevalent in the industry at large. B. Corporate Culture The corporate culture of the company is well-defined with shared believes, expectation and values. The corporate culture has been defined and designed, drawing their instances from the current objectives, strategies, policies and programs of the company. The corporate has designed their policies to maintain CSR for environmental sustainability. Moreover, in order to increase the company’s productivity and quality of performance it has to abide by the values laid down in the corporate culture. To maintain ethical standards company has to follow the guidelines laid under the corporate culture. The corporate culture has been defined keeping in mind the requirement of diversity culture of the employees. The corporate culture has been framed taking inputs from the employees of the company. Since, the firm is presently operating only in one nation diversity of culture is not taken into consideration. C. Corporate Resources The marketing and financial analysis of the firm is as follows: D. Summary of Internal Factors The core competencies of the company are its efficient marketing skills and R& D team. R&D team has been providing steep support to the company’s policy of continuous innovation and technology. The factors most important to maintain its sustainability is its marketing skills, IT development and efficient operation and logistic. V. Analysis of Strategic Factors (SWOT) A. Situational Analysis The most important aspect that strongly affects the corporation’s present and future operations in external macro environmental includes the political, social and economic factors. The internal factors are identified as operational and technological support as well as proper planning of human resource to gain the company’s competitive advantage. B. Review of Mission and Objective The key strategic factors to maintain environmental sustainability has been scheduled depending on the mission statement, objective and policies identified by the company. The mission and objectives that has been detailed at the initial phase of the business has been broadly identified to be matching with operational standards of the company. Moreover, at the present stage of the business, the company should not change its mission as it is performing well. VI. Strategic Alternatives and Recommended Strategy A. Strategic Alternatives The implementation of revised objectives and handling the strategies would help the company to gain competitive advantage. The company would also be gaining its economic as well as environment sustainability by implementing the change in its objectives. The other major feasible alternative strategies that the company can go for, is diversification of products and services. Additionally, the company can also plan for Joint Venture projects which would enhance their performing abilities and help to cater services to larger masses (Maha, 2011). The scenario analysis helps the company to gain a competitive advantage and the corporate to gain their excellence by instigating changes. It helps the company to assess its available opportunities and develop their risk averting techniques. The corporate scenario that has been adopted by the company has been providing stability, retrenchment and growth. Through the implementation of successive cost leadership and product differentiation techniques the company has been creating a successful brand image in the market (Maack, n.d.). B. Recommended Strategy The company can go for product diversification, and r differentiating their services from others trading in the market. In order to make the strategic alternatives successful, the company has to develop the functional level of operation. The efficient development of the marketing department makes product differentiation easy. The strategic factors have been designed, for the development of solutions for long term and short term problems, to maintain their global image and develop sustainable growth. The major requirement of the short term and long term strategies are to identify the functional dilemma and solve them with immediate effect. The policies of the continuous innovation should be revised as per the current standards of development and incorporate the same, effectively to enhance the competitive advantage. The impact of the recommended strategy would help the company to effectively restructure their core and distinctive competencies. VII. Implementation The restructuring of the policies as per changing time, is to be implemented by the top management after planning such changes with the Board of Directors. The managers dealing with individual departments of the company, where the modification is being implemented should be in charge of the change programs. The programs are financially feasible as the implementation are brought only by applying slight changes in the present line of business and requires less amount of production cost. The pro forma budget of changes can be prepared relevantly detailing out the cost sharing of each sector, where the change is being implemented. By preparing the pro forma budget the company will be able to implement the strategic measures to minimize the gap between the actual and planned expenses. The preparation of the pro forma budget would help the company to develop a detailed outlay of the expenses being incurred. However, the detailed pro forma budget makes it complex for the company to identify and allot the budgetary expenses at the priority basis depending on appropriate timetables of individual programs. The standard operating procedures need not be redeveloped, but requires implementing minute changes. VIII. Evaluation and Control The performance result could be pinpointed by unit, project and function, but the result of the performance would vary between areas depending on their macro environmental level. The sound technical development in the organization gives efficient timely information to minimize the occurrence of mistakes. The corporation has been using benchmarking to evaluate its functions and activities. The benchmarking helps the organization to identify their targets as well as aids them to plan the effective policies to attain the set targets. The company has been using appropriate standards and measures to ensure better control and conformance. Additionally, the company also follows a detailed performance appraisal planning to recognize the reward good performance. The company has been implementing strategic planning for rewarding good performances. Conclusion The strategic audit of the company suggests that the company has been operating quiet well with a developed R & D as well as logistic department. These developments incorporated by the country at the initial phase of the business helps the company to identify its major weaknesses at the earliest phase and help the company to operate with an added competitive advantage. Moreover the policies of the company to maintain a balance between the CER and CSR is effectively adhered by the company to maintain their economic sustainability as well as their environmental sustainability. The analysis of their internal environment suggests that the company has been strategically maintaining the different sectors as per the objectives, mission and policies of the company so as to ensure their economic sustainability. However, with continuous monitoring of the technological diversity the company will be able to develop their economic sustainability. The strategic planning of the company suggests that the company must be going for developing their product differentiation technique. This would help the company gain the brand superiority in the market subsequently helping the company to gain the identification in the market. References Bloomsbury Information Ltd. (2013). Information technology industry. Q-finance, 1-3. Davis, G. F. & Useem, M. (2001). Top management, company directors and corporate control. Stephen M. Ross School of Business, 1-27. Dobbins, C. (n.d.). Strategic planning: External environmental scanning. Strategic Business Planning for Commercial Producers, 1-5. Maack, J. N. (n.d.). Scenario analysis: A tool for task managers. The World Bank Group, 1-26. Maha, S. (2011). Generic corporate (growth) strategic alternatives. Retrieved from http://www.slideshare.net/sweetNsourr/generic-corporate-growth-strategy-alternatives Montana, P. & Charnov, B. (1993). Management: A streamlined course for students and business people. Barron’s Business Review Series, 155-169. SMI. (n.d.). Strategy audit – an introduction. Management Consulting, 1-2. Read More